hotel loyalty program research revealing flagging performance o

Canada | United States | India190 Attwell Drive, Suite 450, Toronto M9W, OntarioPhone: +1 416 619 0790 | Fax: +1 647 477 4039 www.infotrellis.com

Hotel loyalty program research

revealing flagging performance of

opportunity for increased share of wallet

Part One: Why Should I Change My Loyalty Program?Loyalty programs across all industry verticals are failing to promote actual loyaltyEven in the hotel industry, loyalty programs are failing to promote actual loyalty

There is a glut of identical loyalty programs rendering yours irrelevant at bestCustomers are expressing a deBillions of dollars in unclaimed loyalty and wallet share are waiting to be captured

Part Two: How Should I Change My Loyalty PrograDifferentiate from your competition by personalizing and customizing interactionsLeverage a deep understanding of the customer by gathering and using lots of dataTake advantage of the insights provided by social media; it’s not a passing fadInvest in the technology now available that can enable dramatic improvements

Part Three: Closing Thoughts Your customers see other industries doing it and know you could be doing it tooThe loyalty program revolution will happen; the early adopters will profit the most

Canada | United States | India 190 Attwell Drive, Suite 450, Toronto M9W, Ontario

Fax: +1 647 477 4039

el loyalty program research compiled and summarized,

revealing flagging performance of existing programs and huge

opportunity for increased share of wallet

Part One: Why Should I Change My Loyalty Program? Loyalty programs across all industry verticals are failing to promote actual loyalty................................

hotel industry, loyalty programs are failing to promote actual loyalty.................................. 4

There is a glut of identical loyalty programs rendering yours irrelevant at best..................................... 6Customers are expressing a desire for better experiences, not better prices......................................... 8Billions of dollars in unclaimed loyalty and wallet share are waiting to be captured.............................. 12

Part Two: How Should I Change My Loyalty Program? Differentiate from your competition by personalizing and customizing interactions.............................. 14Leverage a deep understanding of the customer by gathering and using lots of data............................ 17

ights provided by social media; it’s not a passing fad.................................. 19Invest in the technology now available that can enable dramatic improvements..................................

ther industries doing it and know you could be doing it too................................. 22The loyalty program revolution will happen; the early adopters will profit the most.............................. 24

1

compiled and summarized,

existing programs and huge

................................ 2 .................................. 4

..................................... 6 ......................................... 8

.............................. 12

.............................. 14 ............................ 17

.................................. 19 .................................. 21

................................. 22 .............................. 24


“Even though the

average number of

loyalty programs per

U.S. household has

grown, less than half

are currently active.

Part One: Why Should I Change My Loyalty

Loyalty programs across all industry verticals

are failing to promote actual loyalty

When the notion of the loyalty program first emerged in the business world, it promised to

drive sales and create stronger bonds between customers and their preferred brands. Sharp

growth in the number of companies employing loyalty programs since the firs

working the way they were supposed to.

programs per U.S. household has grown to 21.9 (up from 18.4 in 2010), only 9.5

of those memberships – less than half

This overall growth could be conside

broken about the standard loyalty program model, otherwise why would companies still be

investing in it? The authors of one study, however, warn that

disguise potential underlyin

effectiveness.” (COLLOQUY, )

Indeed, when you look just a little closer at the

numbers, the growth in total subscriptions to

loyalty programs seems a false accomplishment

against the fact that the number of these loyalty

programs that subscribers actually care about is

actually on the decline. “The 21.2% rate of

growth of active memberships from 2010 to

2012 lags behind the overall membership

growth of 26.7%” (COLLOQUY, Page 2)

of actual customer loyalty is not simply slow to grow

percentage of active memberships in relation to total memberships


Fax: +1 647 477 4039

average number of

loyalty programs per

U.S. household has

grown, less than half

are currently active.”

“The percentage of

active memberships

in relation to total

memberships slipped

from 2010 to 2012

Part One: Why Should I Change My Loyalty Program?





growth in the number of companies employing loyalty programs since the firs

programs appeared in the early 1980s indicates that

the promised benefits of these programs continue to

appeal to businesses.

What few people are willing to talk about, however, is

that while the number of companies investing in

loyalty programs has grown exponentially, none of

them seem to have locked on to the perfect strategy

for creating true loyalty. In fact, as more

organizations enter the loyalty scene, it becomes

increasingly obvious that these programs aren’t

re supposed to. “Even though the average number of loyalty


less than half – are currently active.” (COLLOQUY, Page 1)

This overall growth could be considered a sign that there can’t be anything inherently


investing in it? The authors of one study, however, warn that “strong overall growth can

disguise potential underlying weakness in loyalty-marketing execution and

(COLLOQUY, Page 2)

Indeed, when you look just a little closer at the

total subscriptions to

loyalty programs seems a false accomplishment

against the fact that the number of these loyalty

programs that subscribers actually care about is

“The 21.2% rate of

memberships from 2010 to

012 lags behind the overall membership

(COLLOQUY, Page 2) The state

of actual customer loyalty is not simply slow to grow – it is actively shrinking.

percentage of active memberships in relation to total memberships slipped

2

The percentage of

active memberships

in relation to total

memberships slipped

from 2010 to 2012.”




growth in the number of companies employing loyalty programs since the first true loyalty

programs appeared in the early 1980s indicates that

the promised benefits of these programs continue to

What few people are willing to talk about, however, is

that while the number of companies investing in

grams has grown exponentially, none of

them seem to have locked on to the perfect strategy

for creating true loyalty. In fact, as more

organizations enter the loyalty scene, it becomes

increasingly obvious that these programs aren’t

“Even though the average number of loyalty


(COLLOQUY, Page 1)

red a sign that there can’t be anything inherently


trong overall growth can

marketing execution and

it is actively shrinking. “The

slipped from


“Companies in the US have failed

to meaningfully improve

customer satisfaction or reverse

rising switching rates among

their customers.”

2010 to 2012, retreating from 46% to 44%.”

true loyalty program activity has always fallen short of expectations.

participation in 2010 was the highest level in the history of the COLLOQUY Loyalty

Census [...] a fairly dismal number that should alarm program operators.”

(COLLOQUY, )

Analysts and researchers are not recommending a wait

effectiveness of loyalty programs; they advocate active and immediate measures to fix

these flagging programs. They see some organizations taking these steps, but these are the

exception and not the rule. “While industry innovators are whipping their brand

loyalty into shape, other programs are not as strong as they could be.”

Page 11)

Rather, the failure to meaningfully evolve is due to a reluctance to embrace and implement

technologies that would have added the needed sophistication and driven the needed

innovation. “Despite having more data and insights into consumer desires and

preferences, companies in the US have failed to meaningfully improve customer

satisfaction or reverse rising switching rates among their customers.”

Page 5) Across every industry studied, organizations are losing momentum due to a lack of

reinvestment in new technologies that would keep loyalty programs relevant and appealing

to customers. Strong programs rely on innovation and delivering relevant value

propositions.” (COLLOQUY, Page 11)


Fax: +1 647 477 4039

ompanies in the US have failed

to meaningfully improve

customer satisfaction or reverse

rising switching rates among

to 2012, retreating from 46% to 44%.” (COLLOQUY, Page 3) Even at its peak,

true loyalty program activity has always fallen short of expectations. “46% active


fairly dismal number that should alarm program operators.”

Analysts and researchers are not recommending a wait-and-see approach for the faltering


se flagging programs. They see some organizations taking these steps, but these are the

“While industry innovators are whipping their brand

loyalty into shape, other programs are not as strong as they could be.”

These studies strongly suggest that

although these programs have not

lived up to their promises of

creating true loyalty and

connections with customers, this

isn’t because of a flaw in the

premise of a loyalty program or a

lack of capability.

failure to meaningfully evolve is due to a reluctance to embrace and implement


“Despite having more data and insights into consumer desires and

panies in the US have failed to meaningfully improve customer

satisfaction or reverse rising switching rates among their customers.”

Across every industry studied, organizations are losing momentum due to a lack of

echnologies that would keep loyalty programs relevant and appealing

Strong programs rely on innovation and delivering relevant value

(COLLOQUY, Page 11)

3

(COLLOQUY, Page 3) Even at its peak,

“46% active


fairly dismal number that should alarm program operators.”

see approach for the faltering


se flagging programs. They see some organizations taking these steps, but these are the

“While industry innovators are whipping their brand

loyalty into shape, other programs are not as strong as they could be.” (COLLOQUY,

These studies strongly suggest that

although these programs have not

lived up to their promises of

creating true loyalty and

connections with customers, this

isn’t because of a flaw in the

premise of a loyalty program or a

failure to meaningfully evolve is due to a reluctance to embrace and implement


“Despite having more data and insights into consumer desires and

panies in the US have failed to meaningfully improve customer

satisfaction or reverse rising switching rates among their customers.” (Accenture,

Across every industry studied, organizations are losing momentum due to a lack of

echnologies that would keep loyalty programs relevant and appealing

Strong programs rely on innovation and delivering relevant value


“Many of the more

established brands

have begun reducing

the value proposition

offered to guests.”

Even in the hotel industry, loyalty programs


As the pioneers of loyalty programs, airlines and hotel chains are widely regarded as the

masters of the loyalty program. Even so, they’re faring no better than the rest of the

business world in terms of actual customer loyalty.

hotel industry yielded a startling view of the lack of brand affinity among hotel

travelers, even those considered to be loyal customers by traditional measures

like frequency of stay. According to our survey of 4,000 travelers, hotel loyalty

program members are not loyal to their

preferred brand and loyalty programs

drive undesirable brand-switching

behavior.” (Deloitte, Page 2)

Like the global state of loyalty programs,

subscriptions are on the rise even if loyalty

is not. “Hotels are seeing a bit of a

surge as somewhat better economic

times make both business travel and discretionary travel more accessible

though, on the other hand, membership growth in frequent

remains soft in the fact of airline bankruptcies and mergers.”

Although hotel loyalty program memberships have seen a 73% growth since 2006, the hotel

industry severely lags behind other industries in total memberships.

numbers for hotel memberships were approximately half that of to

industry loyalty memberships. (COLLOQUY, Page 5)


Fax: +1 647 477 4039

“Hotel loyalty program

members are not loyal to

their preferred brand and

loyalty programs drive

undesirable brand

switching behavior.”

any of the more

established brands

reducing

the value proposition

offered to guests.”


promote actual loyalty



business world in terms of actual customer loyalty. “Our research on loyalty wi




ram members are not loyal to their

preferred brand and loyalty programs

switching

Like the global state of loyalty programs,

subscriptions are on the rise even if loyalty

bit of a

surge as somewhat better economic

times make both business travel and discretionary travel more accessible

though, on the other hand, membership growth in frequent-flyer programs

remains soft in the fact of airline bankruptcies and mergers.” (COLLOQUY, Page 5)


industry severely lags behind other industries in total memberships. For example, total

numbers for hotel memberships were approximately half that of total numbers for airline

industry loyalty memberships. (COLLOQUY, Page 5)

Particularly in the hotel industry, the boom of

subscription growth may turn out to be superficial

and peaking. “This sector is recovering more

quickly than the economy, catching up after

only slow growth during the recession (9%

from 2008 to 2010). However, that growth

may have peaked – which may be why many

of the more established brands have begun

reducing the value proposition offered to

guests.” (COLLOQUY, Page 10)

4

otel loyalty program

members are not loyal to

their preferred brand and

loyalty programs drive

undesirable brand-





loyalty within the




times make both business travel and discretionary travel more accessible –

flyer programs

LLOQUY, Page 5)


For example, total

tal numbers for airline

Particularly in the hotel industry, the boom of

subscription growth may turn out to be superficial

“This sector is recovering more

quickly than the economy, catching up after

only slow growth during the recession (9%

r, that growth

which may be why many

of the more established brands have begun

reducing the value proposition offered to


“Hotel loyalty

programs as they are

constituted today have

either little or no

impact on travelers’

purchase decisions.

“Hotel loyalty members show remarkably low affinity for their preferred brand.

Furthermore, hotel loyalty members switch between brands and spend as much as

50 percent of their wallet with non

members surveyed, 43 percent disagreed or strongly disagreed with this

statement: “I will not switch to a

competing brand that announces a better

loyalty program.” (Deloitte, Page 4)

promised brand evangelism isn’t being create

by today’s hotel loyalty programs, and the

consequences are both apathy and lost revenue

opportunities.

Customers who don’t care about their hotel

loyalty programs one way or another are ones

who aren’t being influenced at all when making purchasing decisions.

preferred brand is low. Only one out of four hotel travelers allocate more than

percent of their share of wallet to their “preferred” brand.”

hotel customers are motivated to stay at a hotel by pure loyalty to a brand, and it appears

the many millions of dollars invested by the industry in rewards programs h

impact. “Even high frequency travelers only spend 58 percent of their spend with

their preferred brand and 65 percent report having stayed with two or more

brands in the past six months.”


Fax: +1 647 477 4039

“Hotel loyalty members

switch between brands

and spend as much as

50 percent of

wallet with non

preferred brands.

are

constituted today have

impact on travelers’

purchase decisions.”



50 percent of their wallet with non-preferred brands. Of the hotel loyalty program


statement: “I will not switch to a

competing brand that announces a better

(Deloitte, Page 4) The

promised brand evangelism isn’t being created

by today’s hotel loyalty programs, and the

consequences are both apathy and lost revenue

Customers who don’t care about their hotel

loyalty programs one way or another are ones

who aren’t being influenced at all when making purchasing decisions. “Share of wallet of

preferred brand is low. Only one out of four hotel travelers allocate more than

percent of their share of wallet to their “preferred” brand.” (Deloitte, Page 2)


the many millions of dollars invested by the industry in rewards programs hasn’t had any

“Even high frequency travelers only spend 58 percent of their spend with


brands in the past six months.” (Deloitte, Page 2)

All told, the picture painted by these studies and

surveys is not an optimistic one. Hotel loyalty

programs simply aren’t delivering the results that

they’re specifically intended to achieve.

case scenario is that hotel loyalty programs as

they are constituted today have either little or

no impact on travelers’ purchase decisions,

and, worst case, these programs drive

undesirable brand-switching behavior.”

(Deloitte, Page 1)

5

otel loyalty members

switch between brands

and spend as much as

50 percent of their

wallet with non-

preferred brands.”



he hotel loyalty program


“Share of wallet of

preferred brand is low. Only one out of four hotel travelers allocate more than 75

(Deloitte, Page 2) Few


asn’t had any

“Even high frequency travelers only spend 58 percent of their spend with


All told, the picture painted by these studies and

surveys is not an optimistic one. Hotel loyalty

programs simply aren’t delivering the results that

ally intended to achieve. “The best-

case scenario is that hotel loyalty programs as

they are constituted today have either little or

no impact on travelers’ purchase decisions,

and, worst case, these programs drive



“80% of high

frequency hotel

travelers hold two

or more loyalty

cards, and 41.6%

hold four or more.”

There is a glut of identical loyalty programs

rendering yours irrelevant at best

Hotel loyalty programs are not only competing with

with all other 20 loyalty programs the household has subscribed to for share of mind.

2012 the total number of US Loyalty Program Memberships reached 2.647 billion,

from subscribing to every hotel loyalty program that appears before them and, indeed,

many do. “Our research found that approximately 45 percent of hotel trave

and 80 percent of high frequency (16+ nights per month) hotel travelers, hold two

or more loyalty cards. Of the high frequency travelers, 41.6 percent are members

of four or more loyalty programs.”

There is only so much room in a customer’s

wallet and on their keychain, and with so many

organizations all getting on the loyalty

bandwagon, members often don’t even

remember what programs they’ve signed up for,

let alone make purchasing decisions based on

those subscriptions. “The ability to consume

programs is a finite opportunity, and

therefore more doesn’t mean better. Capturing share of mind is really about being

unique and providing a superior experience.”

these loyalty programs that customers are encountering has continued to rise steadily and

isn’t likely to slow any time soon.

confidence grows, [...] they’re exposed to more programs.”

longer the hotel industry waits to differentiate their loyalty programs, the less of their

members’ attention they will have as the loyalty market continues to expand.


Fax: +1 647 477 4039

“The ability to

consume programs is

a finite opportunity,

and therefore more

doesn’t mean better.


rendering yours irrelevant at best

Hotel loyalty programs are not only competing with one another, they’re also competing

with all other 20 loyalty programs the household has subscribed to for share of mind.


reflecting growth of 26.7% from 2010.

Page 2) Even if you take the retail chain, airline and

restaurant loyalty programs (among others) out of the

equation and look only at the competing hotel loyalty

programs, there are a huge number of those too.

Hotel Loyalty Program Memberships in 2012

reached an approximate total of 223,550,000

(COLLOQUY, Page 9) Nothing is stopping those customers


“Our research found that approximately 45 percent of hotel trave



of four or more loyalty programs.” (Deloitte, Page 8)

There is only so much room in a customer’s

wallet and on their keychain, and with so many

organizations all getting on the loyalty

bandwagon, members often don’t even

programs they’ve signed up for,

let alone make purchasing decisions based on

“The ability to consume

programs is a finite opportunity, and


viding a superior experience.” (COLLOQUY, Page 3) The number of


isn’t likely to slow any time soon. “As the economy improves and consumer

’re exposed to more programs.” (COLLOQUY, Page 2)



6

The ability to

programs is

a finite opportunity,

and therefore more

doesn’t mean better.”


one another, they’re also competing

with all other 20 loyalty programs the household has subscribed to for share of mind. In


reflecting growth of 26.7% from 2010. (COLLOQUY,

Even if you take the retail chain, airline and

restaurant loyalty programs (among others) out of the

equation and look only at the competing hotel loyalty

programs, there are a huge number of those too.

lty Program Memberships in 2012

223,550,000.

Nothing is stopping those customers


“Our research found that approximately 45 percent of hotel travelers,




The number of


“As the economy improves and consumer

(COLLOQUY, Page 2) The




“Accumulating

reward points

towards a free

night’s stay was

meaningful at one

time — before the

landscape became

saturated with

loyalty programs.”

Having a loyalty or rewards program no longer makes a company unique in any way.

Loyalty programs are so common that they hardly influence

anymore. “High frequency travelers ranked loyalty programs 12th out of 26 hotel

experience attributes in terms of overall importance to them.”

that requires more presence of mind to actually redeem, and straight

hardly motivational anymore. “As the price point of a product rises, [mobile assisted

shoppers] lean towards purchasing it online at lower

14) The more expensive a potential hotel stay will be, the smaller the discount you must

offer in order to sway a purchase

point” for purchases $500 or more) is easy for an

offers must do more than just provide

Loyalty programs that operate on a “buy one get one free!” and “now 10% off!” mentality

do nothing to regain share of mind from their target

and less effective the more the market becomes inundated with them. If every company

offers identical benefits for their loyalty programs, they do nothing towards creating a

memorable interaction for the customer.


Fax: +1 647 477 4039

meaningful at one

landscape became


Loyalty programs are so common that they hardly influence purchasing decisions at all

“High frequency travelers ranked loyalty programs 12th out of 26 hotel

experience attributes in terms of overall importance to them.” (Deloitte, Page 10)

In particular, the notion of collecting points towards a

reward – once a powerful motivator in the travel

industry, and now featuring across almost every

consumer facing industry - is no longer unique or

especially motivating. “Accumulating reward points

towards a free night’s stay was meaningful at one

time—before the landscape became saturated with

loyalty programs and consumers’ kitchen counters

were littered with account numbers and point

summary statements.” (Deloitte, Page 13)

In fact, reward points are hardly more than a discount

that requires more presence of mind to actually redeem, and straight-up discounts are

“As the price point of a product rises, [mobile assisted

shoppers] lean towards purchasing it online at lower discount rates.”


offer in order to sway a purchase-making decision; because a 5% discount (the “tipping

point” for purchases $500 or more) is easy for any hotel loyalty program to offer, special

provide a discount to be truly “special”.


do nothing to regain share of mind from their target markets. These models become less



memorable interaction for the customer.

7


purchasing decisions at all

“High frequency travelers ranked loyalty programs 12th out of 26 hotel

(Deloitte, Page 10)

In particular, the notion of collecting points towards a

once a powerful motivator in the travel

industry, and now featuring across almost every

is no longer unique or

“Accumulating reward points

owards a free night’s stay was meaningful at one

before the landscape became saturated with

loyalty programs and consumers’ kitchen counters

were littered with account numbers and point-

(Deloitte, Page 13)

are hardly more than a discount

up discounts are

“As the price point of a product rises, [mobile assisted

discount rates.” (Aimia, Page


making decision; because a 5% discount (the “tipping

y hotel loyalty program to offer, special


markets. These models become less




“In the US hotel

industry in just

2013, 6% of hotel

customers switched

loyalty due to an

inferior customer

experience.”

Customers are expressing a desire for better

experiences, not better prices

Analysts and researchers asserting that loyalty programs need to change are issuing these

statements based on the real and vocal preferences of actual consumers. The landscape

isn’t entirely bleak; customers do legitimately want to be part of loyalty progr

“Memberships wouldn’t be rising so quickly if consumers weren’t interested in

building and benefiting from enhanced

relationships with companies.”

2) There is genuine interest in loyalty programs

only so far as customers perceive

The general frameworks of hotel loyalty programs,

however, are operating on incorrect assumptions

about what kinds of benefits customers most value.

“Reliance on the prevailing approach to loyalty programs that rewards repeat

purchases with point-based discounts has built a false sense of security.”

Page 2) Specifically, simply granting loyalty members a lower price does not tend to make

the customer feel particularly special or appreciated, even if they like paying less for

stay. “Price matching does not represent a lone “magic bullet” that will [assure

loyalty].” (Aimia, Page 23)

In order to gain the loyalty of the

preferred brand, hotel loyalty programs must provide an experience that goes above and

beyond price point. “The hotel customers we spoke with expected hotels to give

them something meaningful in

is gained by treatment that makes them feel truly valued, and without any attempt to tailor


Fax: +1 647 477 4039

“Price matching

does not represent

a lone “magic

bullet” that will

assure loyalty

customers switched


experiences, not better prices



isn’t entirely bleak; customers do legitimately want to be part of loyalty progr


building and benefiting from enhanced

relationships with companies.” (COLLOQUY, Page

2) There is genuine interest in loyalty programs - but

only so far as customers perceive an actual benefit.

The general frameworks of hotel loyalty programs,

however, are operating on incorrect assumptions

about what kinds of benefits customers most value.


based discounts has built a false sense of security.”

Specifically, simply granting loyalty members a lower price does not tend to make

the customer feel particularly special or appreciated, even if they like paying less for

“Price matching does not represent a lone “magic bullet” that will [assure

Loyalty programs that offer pure points bonuses are

more appealing to the “exploiter” category of

customers, who are highly price driven and have low

sentimentality for things like buying local, developing

relationships with companies, or being loyal to an

brand regardless of price. Points-only loyalty

programs appeal to 31% of these “exploiters”,

vs. only 18% of the entire pool of consumers.

Exploiters make up only 6.1% of the total

customer base. (Aimia, Page 16)

In order to gain the loyalty of the kinds of people who are actually prone to staying true to a


“The hotel customers we spoke with expected hotels to give

them something meaningful in return for their business.” (Deloitte, Page 13)


8

Price matching

does not represent

a lone “magic

llet” that will

assure loyalty.”




isn’t entirely bleak; customers do legitimately want to be part of loyalty programs.



based discounts has built a false sense of security.” (Deloitte,

Specifically, simply granting loyalty members a lower price does not tend to make

the customer feel particularly special or appreciated, even if they like paying less for their

“Price matching does not represent a lone “magic bullet” that will [assure

Loyalty programs that offer pure points bonuses are

more appealing to the “exploiter” category of

customers, who are highly price driven and have low

sentimentality for things like buying local, developing

relationships with companies, or being loyal to any one

only loyalty

programs appeal to 31% of these “exploiters”,

vs. only 18% of the entire pool of consumers.

Exploiters make up only 6.1% of the total

kinds of people who are actually prone to staying true to a


“The hotel customers we spoke with expected hotels to give

(Deloitte, Page 13) Meaning



“50% of

customers who

switched could

have been

retained just by

being made to

feel more

appreciated.”

a customer’s experience to ensure their happiness, people don’t hesitate to look for another

company that will give them the sort of customer service they’re seeking.

industry in just 2013, 6% of hotel customers switched loyalty due to an inferior

customer experience. (Accenture, )

revenue. In emerging markets, where there is 10% more annual disposable

available to claim than in other markets, the hotel industry fared even worse,

losing 15% of customers due to inferior customer experiences.

ways to enhance their experience, and 51% of customers would have been prevented from

switching if the company recognized and rewarded them for

(Accenture, Page 21)

There are a few companies across the world

industries that have made meaningful inroads

towards accomplishing a superior customer

experience; customers themselves are taking

every opportunity to express what

consider important to the quality of their

interaction. “Companies that delivered

valued customer experiences exhibited:

hyper-relevance, relationships at scale,

seamless experience, and social media

[capabilities].” (Accenture, Page 7)

no lack of data about what customers like and

want more of, and where they feel companies

are failing to live up to expectations.


Fax: +1 647 477 4039

“Companies that

delivered valued

customer experiences

exhibited hyper

relevance, relationships

at scale, seamles

experience, and social

media capabilitie


ll give them the sort of customer service they’re seeking. In the US hotel


(Accenture, Page 9) That 6% represents billions of dollars of lost

emerging markets, where there is 10% more annual disposable


losing 15% of customers due to inferior customer experiences. (Accenture, Page 10)

These staggering numbers cannot be ignored; they

represent both a potential loss that must be prevented and

a potential gain from an opportunity waiting to be seized.

The hotel loyalty programs that cater to their members with

the ideal customer experience are positioned to easily steal

away members from lackluster programs.

50% of customers who switched could have been

retained just by being made to feel more appreciated:

55% of customers would be prevented from switching if the

company contacted them proactively to let them know about


switching if the company recognized and rewarded them for doing more business with them.

There are a few companies across the world’s

industries that have made meaningful inroads

towards accomplishing a superior customer

; customers themselves are taking

every opportunity to express what they

consider important to the quality of their

“Companies that delivered

alued customer experiences exhibited:

relevance, relationships at scale,

seamless experience, and social media

(Accenture, Page 7) There is

no lack of data about what customers like and

want more of, and where they feel companies

failing to live up to expectations.

9

Companies that

delivered valued

customer experiences

exhibited hyper-

relevance, relationships

at scale, seamless

experience, and social

capabilities.”


In the US hotel


That 6% represents billions of dollars of lost

emerging markets, where there is 10% more annual disposable



These staggering numbers cannot be ignored; they

represent both a potential loss that must be prevented and

a potential gain from an opportunity waiting to be seized.

loyalty programs that cater to their members with

the ideal customer experience are positioned to easily steal

50% of customers who switched could have been

retained just by being made to feel more appreciated:

of customers would be prevented from switching if the

company contacted them proactively to let them know about


doing more business with them.


“Experience-

Seeker customers

demonstrate why

companies still

need to invest in

providing a unique

and compelling

experience.”

It isn’t just the hotel industry that sees loyalty switching due to a neglect of the experience.

“51% of US consumers switched service providers in the past year due to poor

customer service experiences, up five percent from 2012.”

Customers aren’t afraid to get specific about what they have problems with, either.

are also frustrations with marketing and sales practices: 85% of customers are

frustrated by dealing with a company that does not make it easy to do business

with them, 84% by companies promising one thing, but delivering another, and

58% by inconsistent experiences from channel to

channel.” (Accenture, Page 5)

could be resolved having a better, more consolidated

system of unified customer data being used intelligently.

This isn’t a problem with individual encounters, but rather

a flaw in communication and lack of streamlined systems

behind the scenes.

Because customer experience is less

measureable than price, it can be easy for organizations

to dismiss the importance of quality of experience as less

important than the price put in front of the

inferior experiences and declining brand loyalty, a significant amount of data has been

gathered by researches and analysts supporting this point.

levels have generally remained stagnant and overall [...] fell by one percent since

customers fell into this category than any other category.

Experience-Seeker customers “demonstrate why [companies] still need to invest in

providing a unique and compelling in

want companies to provide them with that experience and to give them reasons to be loyal.

Their switching is not done out of maliciousness or to penalize but rather the result of

seeking an experience that the company had failed to provide.


Fax: +1 647 477 4039

“C

satisfaction lev

have generally

rema

stagnant and

overall fell by one

percent since

ers

roviding a unique



customer service experiences, up five percent from 2012.” (Accenture, Page 5)

Customers aren’t afraid to get specific about what they have problems with, either.

frustrations with marketing and sales practices: 85% of customers are



58% by inconsistent experiences from channel to

(Accenture, Page 5) These are issues that

could be resolved having a better, more consolidated

tomer data being used intelligently.

This isn’t a problem with individual encounters, but rather

a flaw in communication and lack of streamlined systems

Because customer experience is less explicit and

measureable than price, it can be easy for organizations

to dismiss the importance of quality of experience as less

important than the price put in front of the customer. To assert the connection between


gathered by researches and analysts supporting this point. “...customer satisfaction


2012.” (Accenture, Page 5) “The rate of loyalty

barely budged among US customers, rising just

one percent since 2012.” (Accenture, Page 5)

Customers who would forsake a better price for a better

experience are not a gentle-hearted minority.

mobile savvy customers, many of a generation

considered by traditional wisdom to be fickle and

price-motivated, surveyed by Aimia fell into the

category of “Experience-Seekers”, who “value the

best experience, not just the price.” More

customers fell into this category than any other category. (Aimia, Page 15)

“demonstrate why [companies] still need to invest in

unique and compelling in-store experience.” (Aimia, Page 19)



g an experience that the company had failed to provide. Of the customers who

10

“Customer

satisfaction levels

have generally

remained

stagnant and

overall fell by one

percent since

2012.”



(Accenture, Page 5)

Customers aren’t afraid to get specific about what they have problems with, either. “There

frustrations with marketing and sales practices: 85% of customers are



customer. To assert the connection between


“...customer satisfaction


“The rate of loyalty

barely budged among US customers, rising just

(Accenture, Page 5)

omers who would forsake a better price for a better

hearted minority. 31.7% of

, many of a generation

considered by traditional wisdom to be fickle and

fell into the

Seekers”, who “value the

best experience, not just the price.” More

(Aimia, Page 15)

“demonstrate why [companies] still need to invest in

(Aimia, Page 19) Customers



Of the customers who


“82% of Proficient

travelers rated

consistency of service

as important or very

important to them.”

reported changing loyalty, “81% said that the company could have done

something differently to prevent them from switching.”

“In the US, the number of Experience

Seekers is even higher than average. (36%

vs 31.7%) This suggests that it is even

more important for US [companies] to

differentiate themselves on the [customer]

experience in order to connect with mobile

assisted shoppers.” (Aimia, Page 21)

Customers in the US actively crave a better

customer experience – more so than in other

countries.

This is no small trend - all referenced studies

made a positive link between better customer

experience and higher brand loyalty.

programs. High frequency travelers rated p

important attribute to their overall hotel experience, which suggests customer

experience has more of an impact on their decision to revisit than the loyalty

program.” (Deloitte, Page 2)

The data is clear; customers are actively asking for better service, not just better prices, in

exchange for their loyalty. “Our research indicates that loyalty programs that fail to

build brand affinity are especially vulnerable to undesirable brand switching.”

(Deloitte, )


Fax: +1 647 477 4039

“Past customer

experience tr

loyalty programs. High

frequency travelers

rated past experience

as being the most

important attribute to

their overall hotel

experience

of Proficient

consistency of service

as important or very

important to them.”


something differently to prevent them from switching.” (Accenture, Page 6)

“In the US, the number of Experience-

Seekers is even higher than average. (36%

31.7%) This suggests that it is even

more important for US [companies] to

differentiate themselves on the [customer]

experience in order to connect with mobile-

(Aimia, Page 21)

Customers in the US actively crave a better

more so than in other

all referenced studies

made a positive link between better customer

experience and higher brand loyalty. “Past customer experience trumps loyalty

programs. High frequency travelers rated past experience as being the most



Hotel loyalty program members, even highly

experienced travelers often staying on business, put

high value on customer experience. “82 percent of

Proficient travelers rated consistency

service as important or very important to

them.” (Deloitte, Page 9)


“Our research indicates that loyalty programs that fail to


11

Past customer

experience trumps

loyalty programs. High

frequency travelers

rated past experience

as being the most

important attribute to

their overall hotel

experience.”


(Accenture, Page 6)

“Past customer experience trumps loyalty

ast experience as being the most



Hotel loyalty program members, even highly

experienced travelers often staying on business, put

“82 percent of

Proficient travelers rated consistency of

service as important or very important to


“Our research indicates that loyalty programs that fail to



“40% of total hotel

customers spend up

to half of their hotel

dollars with non-

preferred brands.”

Billions of dollars in unclaimed loyalty and

wallet share are waiting to be captured

Overhauling or supercharging an already

program administrators cannot be faulted for wondering if the cost will be worth it.

understand that it can be hard to secure organizational commitment to invest

brand loyalty. During challenging times, operators and owners are focused on cost

management, and when demand is strong investing in down

initiatives is hard to justify.”

Loyalty programs are not currently capturing as much member walletshare as they could

be, however, and any investment

well worth it. “Only 26.7 percent of high frequency and 25.3 percent of total hotel

travelers surveyed spend more than 75 percent of the hotel spend with their

preferred brand. Further, a substantial percentage

frequency travelers and 40 percen

their hotel dollars with non-

In order to see a better ROI from their loyalty programs, hotels should avoid the superficial

connections that analysts are seeing now and go after ‘genuine loyalty’ in their rewards

program members. “Genuine loyalty drives share of w

behavior, and, ultimately, enhances shareholder value.”

the business value of a loyalty program hinges on making members feel that the program is

something truly special and worthy of the reward of the

risks of ignoring these findings are only matched by the

opportunity inherent in being the first

competition. Accenture’s “switching economy”

expenditure shift resulting from customers that switched from one provider to

another (‘complete switch’) as well as those that will potentially do so as they

have started to take portions of their spending to new p

switch’).” (Accenture, Page 4)


Fax: +1 647 477 4039

“40% of total hotel

spend up

half of their hotel

.”



Overhauling or supercharging an already-expensive loyalty program is a daunting task, and

program administrators cannot be faulted for wondering if the cost will be worth it.

understand that it can be hard to secure organizational commitment to invest


management, and when demand is strong investing in down-the-road loyalty

initiatives is hard to justify.” (Deloitte, Page 1)


investment that could significantly improve those numbers would be

“Only 26.7 percent of high frequency and 25.3 percent of total hotel


preferred brand. Further, a substantial percentage—roughly 35 percent of high

frequency travelers and 40 percent of total hotel customers—spend up to half of

-preferred brands. (Deloitte, Page 10) In order to claim

greater shares of their customers’ annual hotel

spend, hotels must change their loyalty programs

such that being the “preferred” brand has more

impact on purchasing decisions. “...there is an

abundance of evidence to show that

times both good and bad—investment in

customer loyalty can benefit the long

financial performance of the organization

that pursues such a course.” (Deloitte, Page 1)



“Genuine loyalty drives share of wallet, migrates customer

behavior, and, ultimately, enhances shareholder value.” (Deloitte, Page 1)


something truly special and worthy of the reward of their hard-earned dollars. The financial

risks of ignoring these findings are only matched by the significant potential revenue

opportunity inherent in being the first-to-market with a program that would outdo the

Accenture’s “switching economy” premise “estimates the overall potential



have started to take portions of their spending to new providers (‘partial

(Accenture, Page 4)

12



expensive loyalty program is a daunting task, and

program administrators cannot be faulted for wondering if the cost will be worth it. “We

understand that it can be hard to secure organizational commitment to invest in


road loyalty


that could significantly improve those numbers would be

“Only 26.7 percent of high frequency and 25.3 percent of total hotel


roughly 35 percent of high

spend up to half of

In order to claim

greater shares of their customers’ annual hotel

spend, hotels must change their loyalty programs

red” brand has more

“...there is an

abundance of evidence to show that—in

investment in

customer loyalty can benefit the long-term

financial performance of the organization

(Deloitte, Page 1)



allet, migrates customer

(Deloitte, Page 1) Increasing


earned dollars. The financial

potential revenue

market with a program that would outdo the

“estimates the overall potential



roviders (‘partial


“The ‘Switching Economy’ represents 10

in most mature markets against 20

There is undeniable potential for revenue incre

loyalty of their competitor’s customers,

potential for gain if companies are able to

customers who are on the verge

Economy” represents $5.9 trillion of revenue up for grabs for companies globally;

with $1.3 trillion in the US. (Accenture, Page 4)

Using data on the number of 2012 hotel loyalty

program subscribers (223,550,000) and

at-risk percentage and available / unaffiliated annual

walletshare of these at-risk customers,

unaffiliated and at-risk walletshare from hotel

loyalty program members without strong

attachments to any one brand is

$20 billion per year. (See appendix for calculation).

This means there is $20 billion of annual hotel

spend up in the air that has not been “claimed”

by loyalty to any one hotel chain.

If a hotel brand were to secure

loyalty program subscribers who are highly likely to

compelled by today’s loyalty program models, this could result in a rev

increase of as much as $200

billion currently unaffiliated with any genuine loyalty would yield sig

year; the investment required would be negligible after even a small amount of successful

growth.


Fax: +1 647 477 4039

“There is $

of annual hotel spend

up in the air that h

not been “claimed” by

loyalty to any one

hotel chain.

“The ‘Switching Economy’ represents 10 – 15% of total annual disposable income

in most mature markets against 20 – 25% in emerging ones.” (Accenture, Page 4)

potential for revenue increase for those companies who can secure the

loyalty of their competitor’s customers, but there’s also great value in considering the

potential for gain if companies are able to take steps to identify and address those of their

customers who are on the verge of switching. Accenture estimates that the “Switching

$5.9 trillion of revenue up for grabs for companies globally;

. (Accenture, Page 4)

data on the number of 2012 hotel loyalty

program subscribers (223,550,000) and data on the

risk percentage and available / unaffiliated annual

risk customers, the total

risk walletshare from hotel

loyalty program members without strong

tachments to any one brand is approximately

(See appendix for calculation).

billion of annual hotel

spend up in the air that has not been “claimed”

by loyalty to any one hotel chain.

the true loyalty of only 1% of these 24,590,500

loyalty program subscribers who are highly likely to switch and do not feel

compelled by today’s loyalty program models, this could result in a rev

0 million per year. Capturing any amount of the annual $

billion currently unaffiliated with any genuine loyalty would yield significant ROI year after


13

here is $20 billion

of annual hotel spend

up in the air that has

not been “claimed” by

loyalty to any one

hotel chain.

15% of total annual disposable income

(Accenture, Page 4)

ase for those companies who can secure the

but there’s also great value in considering the

take steps to identify and address those of their

of switching. Accenture estimates that the “Switching

$5.9 trillion of revenue up for grabs for companies globally;

24,590,500 hotel

switch and do not feel

compelled by today’s loyalty program models, this could result in a revenue

ng any amount of the annual $20

nificant ROI year after



“The cost of

acquisition remains

higher than the cost

of engaging existing

customers.”

Part Two: How Should I Change My Loyalty Program?

Differentiate from your competition by

personalizing and customizing

Hotel customers have clearly established their desire for better service and a better

experience. What makes an experience feel exceptional and genuine to a hotel guest?

Whatever measures are taken must come across as sincere or else fall fla

consumer base—with a brand affinity so strong that substitutes become

meaningless—can be built through differentiated approaches.”

engaging existing customers.”

member acquisition and focusing more on improving

already have, hotel loyalty programs can stand apart from others of their kind by dedicating

their attention to creating a more customized and individual treatment of their members.

Among the 10 industries covered by the Accenture report, “

progress in providing customers with a tailored experience in 2013”.

Page 6) If a hotel wants their loyalty program to

an opportunity to get ahead of the competition.

lodging [...] perceived to be leading in creating more personalized interactions,

only 36% of customers acknowledge

receiving a tailored experience.”

(Accenture, Page 6) Although researchers

position this as a failing on the part of these

industries, this is the direction in which

customers demand improvement and will be a

major way for programs to step forward and

gain their genuine loyalty.


Fax: +1 647 477 4039

acquisition remains

higher than the cost

of engaging existing

“Only 36% of

customers acknowledge

receiving a tailored

experience.”

Part Two: How Should I Change My Loyalty Program?


personalizing and customizing interactions



Whatever measures are taken must come across as sincere or else fall flat. “...a truly loyal

with a brand affinity so strong that substitutes become

can be built through differentiated approaches.” (Deloitte, Page 5)

Existing loyalty program members must be given a

higher quality experience, potentially at the cost of

reducing the resources invested in growing the

number of total subscribers. “[Focusing purely on

acquiring new loyalty program members]

leaves missed opportunities for leveraging

existing customers to drive returns. The cost

of acquisition remains higher than the cost of

engaging existing customers.” (COLLOQUY, Page 12) By moving on from the stage of

member acquisition and focusing more on improving the experience for the members they



Among the 10 industries covered by the Accenture report, “none made noticeable

progress in providing customers with a tailored experience in 2013”.

If a hotel wants their loyalty program to be memorable and unique, this represents

an opportunity to get ahead of the competition. “Even in industries such as hotels and


only 36% of customers acknowledge

tailored experience.”

Although researchers

position this as a failing on the part of these

industries, this is the direction in which

customers demand improvement and will be a

major way for programs to step forward and

14

nly 36% of hotel

acknowledge

receiving a tailored

experience.”


interactions



“...a truly loyal

with a brand affinity so strong that substitutes become

(Deloitte, Page 5)

Existing loyalty program members must be given a

higher quality experience, potentially at the cost of

reducing the resources invested in growing the

“[Focusing purely on

acquiring new loyalty program members]

ed opportunities for leveraging

existing customers to drive returns. The cost

of acquisition remains higher than the cost of

By moving on from the stage of

the experience for the members they



none made noticeable

progress in providing customers with a tailored experience in 2013”. (Accenture,

be memorable and unique, this represents

“Even in industries such as hotels and



“Our survey underscore

the need for differentiated

targeted approaches for

building loyalty and

customer engagement.”

“Determine why your customers came

to you in the first place and build your

program around fulfilling their unique

needs and communicating and

delivering your unique solutions.”

(COLLOQUY, Page 12) The emphasis

should be placed on treating these

customers as unique individuals. Going

above and beyond what the traditional

loyalty program is capable of

accomplishing means making a guest feel

their patronage is truly valued –

half-heartedly solicited for profit with generic offers.

customers, hotels should consider reinventing what their customers

overwhelmingly consider to be uninspired loyalty programs that lack personal and

customized experiences.” (Deloitte, Page 13)

It is the superior customer experience that will help to secure the loyalty of the younger

generation of travelers – a generation which is quickly establishing itself in corporate roles

and making decisions on how to spend personal time and income as well as wh

on business. “Important things to fix with loyalty programs are those attributes

related to differentiation—provide experience based rewards; offer unique

rewards; and make me feel important. Empowered by technology and influenced

by social media, [members of the

travel decisions and are likely to give their attention to hotels with personalized,

differentiated loyalty programs.”

among the respondents were notably different across customer segments. These

differences further underscore the need f

building loyalty and customer engagement.”


Fax: +1 647 477 4039

“Hotels should consider

reinventing what their

customers overwhelmingly

consider to be uninspired

loyalty programs that lack

personal and customized

experiences.

Our survey underscored

the need for differentiated,

targeted approaches for

building loyalty and

customer engagement.”

“Determine why your customers came

to you in the first place and build your

program around fulfilling their unique

needs and communicating and

delivering your unique solutions.”

The emphasis

should be placed on treating these

as unique individuals. Going

above and beyond what the traditional

accomplishing means making a guest feel

– and that they are not just another walking wallet to be

profit with generic offers. “To build affinity and loyal



(Deloitte, Page 13)

the superior customer experience that will help to secure the loyalty of the younger

a generation which is quickly establishing itself in corporate roles

and making decisions on how to spend personal time and income as well as wh

“Important things to fix with loyalty programs are those attributes

provide experience based rewards; offer unique


ia, [members of the new generation of travelers] make informed


differentiated loyalty programs.” (Deloitte, )

“Personalized and differentiated” doesn’t

mean marketing to traditional segments with

three or four possible variations based on

high-level guesses about customer behavior

inspired by basic demographic information,

either. “Our survey shows that the travel

booking and planning behaviors and

customer engagement preferences


differences further underscore the need for differentiated, targeted approaches for

building loyalty and customer engagement.” (Deloitte, Page 19)

15

otels should consider

reinventing what their

customers overwhelmingly

consider to be uninspired

loyalty programs that lack

nal and customized

experiences.”

and that they are not just another walking wallet to be

“To build affinity and loyal



the superior customer experience that will help to secure the loyalty of the younger

a generation which is quickly establishing itself in corporate roles

and making decisions on how to spend personal time and income as well as where to stay

“Important things to fix with loyalty programs are those attributes

provide experience based rewards; offer unique


new generation of travelers] make informed


and differentiated” doesn’t

mean marketing to traditional segments with

three or four possible variations based on

level guesses about customer behavior

sic demographic information,

“Our survey shows that the travel

booking and planning behaviors and

customer engagement preferences


or differentiated, targeted approaches for


“Any kind of

personalization really

helps. I got stuck at a

hotel on my birthday and

they knew it. The hotel

left a basket of food and a

free movie in my room

and that was the most

fantastic thing ever

there forever now.”

“Little or no priority has been placed on delivering customized rewards or

personalized experiences to connect with high

customers as interchangeable commodities

numbers. While these programs m

they do little to build enduring emotional connections and positive brand attitudes

among customers.” (Deloitte, Page 3)

There are any number of ways that a guest’s stay can be made uniquely suited to them.

Even the customer’s interactions with th

operating as a platform for collecting data about the guest, can be tailored to the

“We recommend [companies] leverage the interactive nature of mobile computing

interfaces to allow some customizat

shoppers]. That way, [each customer]

influential to their own purchasing decision.”

for staying with a certain hotel will vary in appeal depending on any number of factors

even something like intuitively anticipating

business trip or for pleasure could

with as they look for deals.

“Reshape the customer

experience: The hotel customer

experience can and should be

informed by priority customers’

travel preferences and

behaviors.” (Deloitte, Page 24)


Fax: +1 647 477 4039

personalization really

helps. I got stuck at a

hotel on my birthday and

ey knew it. The hotel

left a basket of food and a

free movie in my room

and that was the most

fantastic thing ever—I am

there forever now.”

“The hotel customer experience

can and should be informed by

priority customers’ travel

preferences and behaviors.”


personalized experiences to connect with high-value customers. Employees treat

customers as interchangeable commodities—faceless key fobs or bar

numbers. While these programs may have some impact on purchasing behavior,


(Deloitte, Page 3)

“Away from home and family, Proficient

travelers value personal connection and

want to feel that they matter. Accord

to one focus group participant, “Any kind

of personalization really helps. I got

stuck at a hotel on my birthday and they

knew it. The hotel left a basket of food

and a free movie in my room and that

was the most fantastic thing ever

there forever now.” By providing

personalized experiences customized to

travelers’ unique tastes and preferences,

a preferred brand can build affinity

among Proficient travelers, possibly

increasing their share of wallet and

reducing their “at-risk” clients.”

Page 18)


customer’s interactions with the loyalty program itself, rather than simply

operating as a platform for collecting data about the guest, can be tailored to the


interfaces to allow some customization in loyalty programs for [mobile assisted

[each customer] can opt for the rewards that are most

influential to their own purchasing decision.” (Aimia, Page 28) The potential rewards

for staying with a certain hotel will vary in appeal depending on any number of factors

intuitively anticipating whether a customer is shopping around for a

could influence the interface and content they are presented

experience: The hotel customer

experience can and should be

informed by priority customers’

(Deloitte, Page 24)

16

The hotel customer experience

can and should be informed by

priority customers’ travel

preferences and behaviors.”


value customers. Employees treat

faceless key fobs or bar-code

ay have some impact on purchasing behavior,


“Away from home and family, Proficient

travelers value personal connection and

want to feel that they matter. According

to one focus group participant, “Any kind

of personalization really helps. I got

stuck at a hotel on my birthday and they

knew it. The hotel left a basket of food

and a free movie in my room and that

was the most fantastic thing ever—I am

now.” By providing

personalized experiences customized to

travelers’ unique tastes and preferences,

a preferred brand can build affinity

among Proficient travelers, possibly

increasing their share of wallet and

risk” clients.” (Deloitte,


loyalty program itself, rather than simply

operating as a platform for collecting data about the guest, can be tailored to their interests.


ion in loyalty programs for [mobile assisted

can opt for the rewards that are most

The potential rewards

for staying with a certain hotel will vary in appeal depending on any number of factors –

whether a customer is shopping around for a

rface and content they are presented


“A hotel’s technology

strategy should be

customized according to

the travel behaviors and

preferences of their

priority customers. A one

size-fits-all strategy will

likely be less effective

Leverage a deep

customer by gathering and using lots of data

Traditional wisdom or common assumptions about customer segment

understanding the modern customer.

not exhibit a very strong slant towards one particular age cohort, and are a

demographically diverse group. The gender of [mobile assisted shoppers] i

to an event split. In terms of rural vs. urban distribution, they show similar splits

as to the general distribution in the

three countries surveyed. In looking at

income, the group fits into three

roughly even tiers.” (Aimia, Page 5)

Research strongly suggests that customer

segments and strategies revolve not around

gut feeling or assumption but rather on

pure data that has been analyzed to identify patterns and groupings of customers based on

behaviors and preferences rather than supe

utilize valuable consumer data collected at enrollment and point of purchase to

differentiate their loyalty programs across customer segments.”

Organizations are increasingly turning to data mining to drive better business decisions and

customer experiences. “More and more companies are seeing the value of offering

loyalty programs and – more importantly

drawing actionable insights from customer data.”


Fax: +1 647 477 4039

“Many businesses fail to

utilize valuable consumer

data to differentiate their

loyalty programs across

customer segments

A hotel’s technology

strategy should be

stomized according to

the travel behaviors and

preferences of their

priority customers. A one-

all strategy will

likely be less effective.”

Leverage a deep understanding of the


Traditional wisdom or common assumptions about customer segmentation is not effective in

understanding the modern customer. “We found that [mobile assisted shoppers] do


demographically diverse group. The gender of [mobile assisted shoppers] i


as to the general distribution in the

three countries surveyed. In looking at

income, the group fits into three

(Aimia, Page 5)

Research strongly suggests that customer

segments and strategies revolve not around

gut feeling or assumption but rather on


behaviors and preferences rather than superficial categories. “Many businesses fail to


differentiate their loyalty programs across customer segments.” (Deloitte, Page 3)


“More and more companies are seeing the value of offering

more importantly – the value of tracking, reporting, and

drawing actionable insights from customer data.” (COLLOQUY, Page 12)

absolutely essential for providing each

customer with the ideal experience at every

point of contact with the company.

technology strategy should be

customized according to the travel

behaviors and preferences of their

priority customers. A one-size

strategy will likely be less effective given

the broad spectrum of technology

adoption and ways customers want to be

engaged that were reported by our

survey respondents.” (Deloitte, Page 19)

17

Many businesses fail to

utilize valuable consumer

data to differentiate their

grams across

customer segments.”

understanding of the


ation is not effective in

“We found that [mobile assisted shoppers] do


demographically diverse group. The gender of [mobile assisted shoppers] is close



“Many businesses fail to


(Deloitte, Page 3)


“More and more companies are seeing the value of offering

the value of tracking, reporting, and

(COLLOQUY, Page 12) This data is

viding each

customer with the ideal experience at every

point of contact with the company. “A hotel’s

technology strategy should be

customized according to the travel

behaviors and preferences of their

size-fits-all

likely be less effective given

the broad spectrum of technology

adoption and ways customers want to be

engaged that were reported by our

(Deloitte, Page 19)


“This understanding,

which can be derived by

data mining of loyalty

member databases and

monitoring online

websites, should guide

the formulation of any

technology strategy and

subsequent investment.”

“Identifying your best customers and concentrating your resources on them will

keep your program and your ROI fit and trim.”

properly determine which of your existing loyalty members would provide the best return if

the relationship were nurtured, you must be collecting and analyzing data to provide a

deeper understanding of your customers.

“Mining [customer] data will likely produce a rich understanding of discrete

customer segments with distinct service preferences. These data

can be used to determine which customers’ brand loyalty is critical to build and

maintain.” (Deloitte, Page 6) “Encourage specific behaviors with unexpected rewards.

Leverage your insight into the behaviors of high value customer segments

offering loyalty rewards to elicit these behaviors and increase their occurrence. For example,

a hotel can analyze booking data to determine which loyalty members often travel with

children. When these loyalty members return to the hotel, offer them complimentary

children’s programming and story

quiet at night. The parents, as well as other hotel guests, will appreciate the relaxing

environment and their children will feel uniquely special.” (Deloitte, Page 23)

“Make rewards personally meaningful

stimulate more frequent in-room dining during a leisure traveler’s stay. By analyzing

frequent traveler history, a hotel can determine those loyalty members who typically order

in-room dining and a glass of wine with their meal on the night of their arrival. Use this

information to encourage additional in

complimentary glass of a special vintage. Alternatively, book rooms during slow periods by

hosting special wine tastings in the hotel restaurant with discounted hotel stays for these

same wine aficionados.” (Deloitte, Page 23)


Fax: +1 647 477 4039

This understanding,

which can be derived by

data mining of loyalty

member databases and

websites, should guide

formulation of any

technology strategy and

subsequent investment.”


keep your program and your ROI fit and trim.” (COLLOQUY, Page 12) In order to


tionship were nurtured, you must be collecting and analyzing data to provide a

deeper understanding of your customers.

“Hotels should understand how their priority

customers use technology and engage them

at every stage of the travel process

planning, traveling, and sharing. This

understanding, which can be derived by

mining of loyalty member databases and

monitoring online websites, should guide

the formulation of any technology

strategy and subsequent investment

(Deloitte, Page 19) Data-driven hotels

competing directly with other hotel loyalty

programs will have “a strong advantage

over competitors that do not use a data

driven, targeted approach.”

Page 8)


customer segments with distinct service preferences. These data-driven insights


“Encourage specific behaviors with unexpected rewards.

Leverage your insight into the behaviors of high value customer segments


e booking data to determine which loyalty members often travel with


children’s programming and story-time turn-down service to help kids remain calm and

parents, as well as other hotel guests, will appreciate the relaxing


Make rewards personally meaningful. Hotels, for example, can develop strategies to

room dining during a leisure traveler’s stay. By analyzing


room dining and a glass of wine with their meal on the night of their arrival. Use this

n to encourage additional in-room dining with a next-night offer of a



e wine aficionados.” (Deloitte, Page 23)

18


(COLLOQUY, Page 12) In order to


tionship were nurtured, you must be collecting and analyzing data to provide a

“Hotels should understand how their priority

customers use technology and engage them

at every stage of the travel process—

planning, traveling, and sharing. This

e derived by data

mining of loyalty member databases and

monitoring online websites, should guide

the formulation of any technology

strategy and subsequent investment.”

driven hotels

competing directly with other hotel loyalty

“a strong advantage

over competitors that do not use a data-

driven, targeted approach.” (Deloitte,


driven insights


“Encourage specific behaviors with unexpected rewards.

Leverage your insight into the behaviors of high value customer segments by


e booking data to determine which loyalty members often travel with


down service to help kids remain calm and

parents, as well as other hotel guests, will appreciate the relaxing


. Hotels, for example, can develop strategies to

room dining during a leisure traveler’s stay. By analyzing


room dining and a glass of wine with their meal on the night of their arrival. Use this

night offer of a




“96% of young travelers

social networking sites to

share opinions of hotels

Take advantage of the insights provided by

social media; it’s not a passing fad

Even with the advantage that customer data brings to decision

customize the guest experience, some businesses are still reluctant to invest in gathering

this data from social media. Research has very explicitly concluded that social media is

useful and valuable to businesses in a number of ways, in addition to being important to

their customers. “Clearly defined loyalty is easy to measure. When emotional loyalty

exists possible metrics could include customer referrals, social media reviews, or

constructive customer feedback forms.”

including that shared via social media,

continues to be the most important

and impactful source of company

information across industries (used by

71% of surveyed customers).”

(Accenture, Page 6) “High price points

and complex features [...] are known

to drive knowledge-seeking on all

internet platforms.” (Aimia, Page 10)

Companies, especially those selling

products and services above the $500

price point like most hotel brands do,

cannot afford to disregard what is being

said about them online.

The upcoming generation of travelers uses social media very heavily through the process of

booking and staying at a hotel.

plan travel, 97% visit social media and review sites while booking travel,

social networking sites to share opinions of hotels, and 90% like to be

communicated with via social networks and social media.

conducting a location-based check

company’s social media page, and 24% are interested in posting about their

experience on their own social media page.

large segment of customers who feel that their personal opinions and experiences regarding


Fax: +1 647 477 4039

“Word of mouth, including

that shared via social media,

continues to be the most

important and impactful

source of company

information across

industries (used by 71% of

surveyed customers).”

of young travelers use

social networking sites to

share opinions of hotels.”


social media; it’s not a passing fad

Even with the advantage that customer data brings to decision-making and the ability to


from social media. Research has very explicitly concluded that social media is


“Clearly defined loyalty is easy to measure. When emotional loyalty

ists possible metrics could include customer referrals, social media reviews, or

constructive customer feedback forms.” (Deloitte, Page 6) “Word of mouth,

including that shared via social media,

continues to be the most important

and impactful source of company

information across industries (used by

71% of surveyed customers).”

“High price points

are known

seeking on all

(Aimia, Page 10)

, especially those selling

products and services above the $500

price point like most hotel brands do,

cannot afford to disregard what is being


booking and staying at a hotel. 36% have used a social media site to research and/or

plan travel, 97% visit social media and review sites while booking travel,


communicated with via social networks and social media. (Deloitte, )

“Mobile assisted shoppers are also

interested in sharing information

about their shopping experience and

engaging digitally with the retail

store.” 33% are interested in

based check-in, 31% are interested in interacting with a

a page, and 24% are interested in posting about their

experience on their own social media page. (Aimia, Page 26) This represents a very


19

Word of mouth, including

that shared via social media,

continues to be the most

important and impactful

source of company

information across

industries (used by 71% of

surveyed customers).”


making and the ability to


from social media. Research has very explicitly concluded that social media is


“Clearly defined loyalty is easy to measure. When emotional loyalty

ists possible metrics could include customer referrals, social media reviews, or

“Word of mouth,


36% have used a social media site to research and/or

plan travel, 97% visit social media and review sites while booking travel, 96% use


(Deloitte, Page 19)

ed shoppers are also

interested in sharing information

about their shopping experience and

engaging digitally with the retail

store.” 33% are interested in

in, 31% are interested in interacting with a

a page, and 24% are interested in posting about their

(Aimia, Page 26) This represents a very



“60% of mobile shoppers

are more likely to make a

purchase when influenced

by helpful online reviews

a company do matter and dese

being said on these channels is paramount.

update to a social media service while in

valuable data that companies should be collecting and analyzing for consumer behavior

insights.

One of the advantages of social media and

review sites is that customers are

significantly less likely to self-censor than

those responding to customer satisfaction

surveys, and are more likely to get right to

the point. “In 2012, more than 117

million online travelers are expected to

use travel websites, which is 61 percent

of the Internet users in the United

States.” (Deloitte, Page 11) They’re not just

sharing their own experiences, which

provides a company with valuable on its o

of anybody who uses their review as part of planning and researching for a trip.

US customers use third-party online sources such as official review sites, and 25%

use customer reviews and comments

information about a company’s products and services.”

especially what’s being said online in formal r

very influential to shoppers and should be collected and monitored.

The privacy of the customer must, of course, be very carefully maintained. If there are any

significant stumbling blocks to be wary of in moving towards a more data

program, it is the issue of privacy and sensitivity.

are regarded as important sources of information, [...] 82% of US customers

report that they feel companies they buy from cannot be trusted on how to use

personal information.” (Accenture, Page 6)

using social media data for this reason, but do need to be cautious and thoughtful.


Fax: +1 647 477 4039

“48% of US customers

use third-party online

sources such as official

review sites, and 25%

use customer reviews

and comments fr

social media sites

60% of mobile shoppers

are more likely to make a

purchase when influenced

by helpful online reviews.”

a company do matter and deserve to be heard in one way or another. Awareness of what is

being said on these channels is paramount. 25% of mobile shoppers have posted an

update to a social media service while in-store. (Aimia, Page 7) This is generating


One of the advantages of social media and

review sites is that customers are

censor than

those responding to customer satisfaction

surveys, and are more likely to get right to

more than 117

million online travelers are expected to

use travel websites, which is 61 percent

of the Internet users in the United

They’re not just

sharing their own experiences, which

provides a company with valuable on its own, but also influencing the purchasing decisions

of anybody who uses their review as part of planning and researching for a trip.

party online sources such as official review sites, and 25%

use customer reviews and comments from social media sites, to find out

information about a company’s products and services.” (Accenture, Page 6)

60% of mobile shoppers are more

likely to make a purchase when

influenced by helpful online reviews,

55% when influenced by advice from

someone they know, and 52% when

given additional product information.

(Aimia, Page 25) This information,

especially what’s being said online in formal reviews and in conversation on social media, is

very influential to shoppers and should be collected and monitored.


significant stumbling blocks to be wary of in moving towards a more data-driven loyalty

program, it is the issue of privacy and sensitivity. “Yet, while social media and online



(Accenture, Page 6) Organizations should not be deterred from

g social media data for this reason, but do need to be cautious and thoughtful.

20

48% of US customers

party online

sources such as official

review sites, and 25%

use customer reviews

and comments from

social media sites.”

rve to be heard in one way or another. Awareness of what is

25% of mobile shoppers have posted an

, Page 7) This is generating


wn, but also influencing the purchasing decisions

of anybody who uses their review as part of planning and researching for a trip. “48% of

party online sources such as official review sites, and 25%

from social media sites, to find out

(Accenture, Page 6)

60% of mobile shoppers are more

likely to make a purchase when

influenced by helpful online reviews,

55% when influenced by advice from

someone they know, and 52% when

given additional product information.

(Aimia, Page 25) This information,

eviews and in conversation on social media, is


driven loyalty

a and online



Organizations should not be deterred from

g social media data for this reason, but do need to be cautious and thoughtful.


“Technology affords the

means to reengage and

build affinity with “at

customers. Further, it

provides the potential to

capture incremental sha

of wallet from loyal

customers.”

Invest in the technology now available that

can enable dramatic improvements

If the level of sophistication and complexity of such a system of highly personalized and

intelligent accommodations for customers seems overwhelming, hotel brands should feel

reassured that this is not an endeavor that must be built entirely from scratch using internal

IT resources. “The technology exists to coordinate among all customer

departments to deliver personalized experiences both on and off the hotel

premises—a customer experience s

preferred brand would be difficult to sever.”

hotel brands to get their hands dirty and start investing in this technology and in the talent

to integrate it with the existing loyalty program.

and infrastructure: Build the technology, talent, training, and infrastructure

necessary to deliver differentiated customer experiences that extend beyond the

on-premise experience.” (Deloitte, Page 24)

technologies, and skillsets exist to drive meaningful improvements. [...] loyalty

restoration integrates these assets to give hotel executives a powerful competitive

differentiator: a 360° view of loyalty.”

“Strategic investment in those technologies that provide opportunities to engage customers

or facilitate their travel will potentially provide hotels with a powerful differentiator

Technology affords the means to ree

customers. Further, it provides the potential to capture incremental share of

wallet from loyal customers by accommodating priority customers’ travel behaviors and

preferences and even engaging them off


Fax: +1 647 477 4039

Technology affords the

means to reengage and

build affinity with “at-risk”

customers. Further, it

provides the potential to

capture incremental share

of wallet from loyal


can enable dramatic improvements


gent accommodations for customers seems overwhelming, hotel brands should feel


“The technology exists to coordinate among all customer

tments to deliver personalized experiences both on and off the hotel

a customer experience so powerful that the connection felt for a

preferred brand would be difficult to sever.” (Deloitte, Page 24) Analysts are urging

ands dirty and start investing in this technology and in the talent

to integrate it with the existing loyalty program. “Reinvest in foundational capabilities


r differentiated customer experiences that extend beyond the

(Deloitte, Page 24)

“Technology, especially, can be a

powerful way to engage customers

the way they want to throughout all

stages of travel.” (Deloitte, Page 6)

technology exists, riding on the wave of

enthusiasm and innovation around the “big

data” narrative. Companies need only do

some investigation into the possible

vendors of these products and related

services, seeking the best fit for a

partnership that will revolutionize the way

their customers are treated.



view of loyalty.” (Deloitte, Page 5)


or facilitate their travel will potentially provide hotels with a powerful differentiator

Technology affords the means to reengage and build affinity with “at


from loyal customers by accommodating priority customers’ travel behaviors and

preferences and even engaging them off-premises.” (Deloitte, Page 19)

21



gent accommodations for customers seems overwhelming, hotel brands should feel


“The technology exists to coordinate among all customer-facing

tments to deliver personalized experiences both on and off the hotel

felt for a

Analysts are urging

ands dirty and start investing in this technology and in the talent

“Reinvest in foundational capabilities


r differentiated customer experiences that extend beyond the

“Technology, especially, can be a

powerful way to engage customers

the way they want to throughout all

(Deloitte, Page 6) The

technology exists, riding on the wave of

enthusiasm and innovation around the “big

data” narrative. Companies need only do

some investigation into the possible

vendors of these products and related

services, seeking the best fit for a

will revolutionize the way

their customers are treated. “The data,




or facilitate their travel will potentially provide hotels with a powerful differentiator.

ngage and build affinity with “at-risk”


from loyal customers by accommodating priority customers’ travel behaviors and


“One focus group

participant summed it up

this way: ‘Hotels have so

much data that can get us

better service, and they are

not using it.’”

Part Three: Closing Thoughts

Your customers see other industries doing it

and know you could be doing it too

“Today, hotel consumers have greater access to information and more choices

than ever before. They make informed decisions ab

recommendations from friends and family as well as online travel websites and

use of mobile applications.”

and tuned in and harder to fool than ever; they know more than any past generations of

consumers and understand how to find out anything they don’t know.

information searches increased quite clearly as

increased.” This rate increases sharply until it levels off at 62% for [purchases]

priced over $250. (Aimia, Page 10) At the standard hotel price point, it’s probably safe to

assume that 60% of mobile savvy shoppers are do

wallet share; they understand their value as a member and expect to get something out of

it and to feel properly appreciated.

“Resoundingly, participants affirmed that hotel loyalty programs are

undifferentiated and typically fail to make customers feel like they matter. One

focus group participant summed it up this way:

can get us better service, and they are not using it.””

are increasingly coming to expect more personalized treatment; globally, expectations have

increased across the board compared to 2012. In particular,

specialized treatment for being a good customer.


Fax: +1 647 477 4039

icipant summed it up

Hotels have so

much data that can get us

ice, and they are

Part Three: Closing Thoughts


and know you could be doing it too


than ever before. They make informed decisions about where to stay based on


use of mobile applications.” (Deloitte, Page 11) The consumers of 2014 are connected


consumers and understand how to find out anything they don’t know. “The frequency of

information searches increased quite clearly as the price point of the [purchase]


(Aimia, Page 10) At the standard hotel price point, it’s probably safe to

assume that 60% of mobile savvy shoppers are doing their research.

“If programs are not crystal

providing benefit to the customer in

exchange for that information, and are

not clear in their privacy policy,

consumers can back off from

participating.” (COLLOQUY, Page 4)

Customers understand that companies

offer loyalty programs to harvest more

data on them and to try to secure more

erstand their value as a member and expect to get something out of

it and to feel properly appreciated.



focus group participant summed it up this way: “Hotels have so much data that

nd they are not using it.”” (Deloitte, Page 13)

expect more personalized treatment; globally, expectations have

increased across the board compared to 2012. In particular, 55% of customers expect

for being a good customer. (Accenture, Page 27)

22



out where to stay based on


The consumers of 2014 are connected


“The frequency of

the price point of the [purchase]


(Aimia, Page 10) At the standard hotel price point, it’s probably safe to

“If programs are not crystal-clear in

providing benefit to the customer in

information, and are

not clear in their privacy policy,

consumers can back off from

(COLLOQUY, Page 4)

Customers understand that companies

offer loyalty programs to harvest more

data on them and to try to secure more

erstand their value as a member and expect to get something out of



“Hotels have so much data that

(Deloitte, Page 13) Customers

expect more personalized treatment; globally, expectations have

55% of customers expect



“Both “ability to value

me” and “ability to

understand my needs”

were among the

young, tech-savvy

segment’s top 5 most

important attributes.”

44% of customers are more likely to be

interested in receiving marketing messages if

they get some form of guarantee they won’t

be spammed, and 33% are more likely to be

interested if the messages if they’re more

tailored to suit their needs and preferences.

They understand that organizations have t

ability to send them only relevant messages, and

are quickly losing patience with those that

continue to send them communications and offers

they aren’t interested in. (Accenture, Page 32)

The upcoming generation of business professionals, young adults who have just started to

travel for business and for their own personal vacations (people in the 20

most interested in comfort and ability to value them; they expect more than those

cleverly using data to provide better service, like the Amazons and Googles of the world,

and expect that hotels, especially large, successful chairs with the money and the data to be

doing it, ought to be able to provide them with a super


Fax: +1 647 477 4039

“33% of customers

are more likely to be

interested in receiving

marketing messages

the messages if

they’re more tailored

to suit their needs and

preferences

Both “ability to value

me” and “ability to

eds”

savvy

op 5 most

important attributes.”

44% of customers are more likely to be

ested in receiving marketing messages if

they get some form of guarantee they won’t

be spammed, and 33% are more likely to be

interested if the messages if they’re more

tailored to suit their needs and preferences.

They understand that organizations have the

ability to send them only relevant messages, and

are quickly losing patience with those that

continue to send them communications and offers

they aren’t interested in. (Accenture, Page 32)


travel for business and for their own personal vacations (people in the 20 – 30 range


who came before them.” (Deloitte, Page 15)

“Both “ability to value me” and “ability to

understand my needs” were among the

[young, tech-savvy segment’s] top 5 most

important attributes.” (Deloitte, Page 15)

The hotel industry’s target market already

understands, with no illusions, that loyalty

programs are for collecting customer data and for

trying to increase share of wallet. They’ve seen

examples of companies who are innovators in



doing it, ought to be able to provide them with a superior, individualized experience.

23

of customers

are more likely to be

in receiving

marketing messages

the messages if

they’re more tailored

to suit their needs and

preferences.”


30 range) “are


(Deloitte, Page 15)

“Both “ability to value me” and “ability to

understand my needs” were among the

savvy segment’s] top 5 most

(Deloitte, Page 15)

The hotel industry’s target market already

understands, with no illusions, that loyalty

programs are for collecting customer data and for

trying to increase share of wallet. They’ve seen

re innovators in



ior, individualized experience.


The loyalty program revolution will happen;

the early adopters will profit the most

“We expect the entire loyalty industry to grow, on average, in the years to come.

But those companies that study the data [...] will

terms of growth, and will make the most of the economic comeback.”

Page 12) This next step in loyalty program evolution, says the research, is all but inevitable.

Those companies that hesitate and lag behind will l

risk” loyalty program members to more data

customized and ultimately more impressive customer experience.

Bibliography and Calculations

Deloitte: A Restoration in Hotel Loyalty: Developing a blueprint for reinventing loyalty programs

Deloitte: Rising above the Clouds: Charting a course for renewed airline consumer loyalty

Bulking Up: The 2013 COLLOQUY Loyalty Census

Accenture 2013 Global Consumer Pulse Survey

Aimia: Showrooming and the Rise of the Mobile

Calculations of Unaffiliated Annual Spend in the Hotel Industry


Fax: +1 647 477 4039


the early adopters will profit the most


But those companies that study the data [...] will be the ones to finish first in

terms of growth, and will make the most of the economic comeback.”

This next step in loyalty program evolution, says the research, is all but inevitable.

Those companies that hesitate and lag behind will likely find themselves losing their “at

risk” loyalty program members to more data-driven programs that deliver a highly

customized and ultimately more impressive customer experience.

Bibliography and Calculations

Loyalty: Developing a blueprint for reinventing loyalty programs


Bulking Up: The 2013 COLLOQUY Loyalty Census

Accenture 2013 Global Consumer Pulse Survey

ooming and the Rise of the Mobile-Assisted Shopper

Calculations of Unaffiliated Annual Spend in the Hotel Industry

24



be the ones to finish first in

terms of growth, and will make the most of the economic comeback.” (COLLOQUY,

This next step in loyalty program evolution, says the research, is all but inevitable.

ikely find themselves losing their “at-

driven programs that deliver a highly

Loyalty: Developing a blueprint for reinventing loyalty programs


hotel loyalty program research revealing flagging performance o

Documents